$400 Million Settlement: E-book Price-Fixing May Cost Apple Big Time

The number of Apple’s settlement with 33 states over electronic book price fixing could reach as high as $400 million. Last month, the company agreed to settle the class action brought by 33 attorneys generals seeking hundreds of millions of dollars in damages for allegedly colluding with book publishers to inflate e-book prices. The settlement was originally kept secret as the company was waiting to deal with the final appeal before formalizing the deal. The class action was certified after Apple lost an earlier antitrust suit in which the court ordered it to modify publisher contracts to prevent price fixing and hire an outside monitor to review the company’s antitrust policies. Apple had been accused of working with Hachette Book Group, HarperCollins, Simon & Schuster, Macmillan, and Penguin to raise prices of e-books to escape the uniform $9.99 Amazon had been charging. The collusion was intended to set high prices so that Apple could take a worthwhile cut and the publishers could bank more money. The individual publishers have all previously signed settlements, leaving Apple as the only defendant left in the case.

New York’s attorney general is calling the settlement a “major victory,” stating that this just “proves that even the biggest, most power companies in the world must play by the same rules as everyone else.” Apple still maintains its innocence and plans to fight the accusations throughout the appeals process. The ultimate settlement price depends on the outcome of Apple’s appeal. If the case is remanded to a lower court, then Apple will only have to pay $70 million. But, if Apple is able to win the appeal, they could pay nothing. Amazon, the biggest retailer in e-books, continues to put pressure on the publishers. In fact, Apple’s settlement coincides with the well-documented fight between Hachette and Amazon as they try to come to terms on pricing for e-books in new contracts. Hachette is the first of the five major publishers to renegotiate with Amazon after the Apple antitrust ruling.